EUR/USD – Limited Losses Ahead of Key US Releases

EUR/USD has posted modest losses in Tuesday trading. The pair is trading in the mid-1.36 range in the European session. Taking a look at economic news, there is just one Eurozone release today. German Import Prices looked weak, coming in at a flat 0.0% in December. As well, EU financial ministers will gather for their monthly meeting. In the US, there are two key events on the schedule – Core Durable Goods Orders and CB Consumer Confidence.

The US housing sector continues to post worrying numbers. New Home Sales dropped sharply to 414 thousand, down from 464 thousand a month earlier. This was nowhere near the estimate of 457 thousand. This follows a disappointing Existing Home Sales release last week. The key indicator dropped to 4.87 million, down from 4.90 million a month earlier and shy of the estimate of the 4.94 million. This was the indicator’s fourth straight drop. The markets will be hoping for better news from Pending Home Sales on Thursday. A third straight housing reading below the estimate could weigh on the dollar.

The week started on a high note out of Germany, as Ifo Business Climate, a key event, continues to improve. The indicator topped the 110 level, posting a reading of 110.6 points, up from 109.5 last month. This edged above the estimate of 110.2 points. Germany is the Eurozone’s largest economy, and the region will need the German locomotive to lead the way to an economic recovery.

Eurozone inflation indicators continue to point to weak inflation, and the situation as deteriorated to such an extent that the IMF has voiced its concern about the danger of deflation in Europe, which would hurt any moves towards stronger growth. The danger of deflation was noted in a report published by the organization as well as in a speech by IMF Managing Director Christine Lagarde at the World Economic Forum in Davos. With interest rates at a record low 0.25%, the ECB may have to consider reducing deposit rates below zero in order to push inflation indicators higher.

EUR/USD for Tuesday, January 28, 2014

EUR/USD January 28 at 11:20 GMT

EUR/USD 1.3641 H: 1.3688 L: 1.3629

EUR/USD Technical

S3

S2

S1

R1

R2

R3

1.3337

1.3410

1.3585

1.3649

1.3786

1.3893

EUR/USD has lost ground in Tuesday trading. The pair touched a low of 1.3629 earlier in the European session as the euro remains under pressure.

1.3585 is providing support. This is followed by support at 1.3410.

1.3649 has reverted to resistance as the euro has lost ground. This weak line could see action if the dollar retracts. This is followed by a resistance line at 1.3786.

Current range: 1.3585 to 1.3649

Further levels in both directions:

Below: 1.3585, 1.3410, 1.3347 and 1.3257

Above: 1.3649, 1.3786, 1.3893, 1.4000 and 1.4153

OANDA’s Open Positions Ratio

EUR/USD ratio is pointing to movement towards long positions in Tuesday trading. This is not reflected in the pair’s current movement, as the euro has lost ground against the dollar. Most of the open positions in the ratio are short, indicative of trader bias towards the dollar continuing to move higher against the euro.

The euro has posted modest losses on Tuesday. We could see some volatility from the pair during the North American session, as the US releases key manufacturing and consumer confidence numbers.

EUR/USD Fundamentals

7:00 German Import Prices. Estimate 0.3%. Actual 0.0%.

All Day – ECOFIN Meetings.

13:30 US Core Durable Goods Orders. Estimate 0.7%.

13:30 US Durable Goods Orders. Estimate 1.9%.

14:00 US S&P/CS Composite-20 HPI. Estimate 13.7%.

15:00 US CB Consumer Confidence. Estimate 78.3 points.

15:00 US Richmond Manufacturing Index. Estimate 13 points.

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.

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